Iron Rice Bowl No More: China Reviews State Enterprise Salaries

China’s state-owned enterprises (SOEs) will soon have a reformed wage system aimed at increasing market competitiveness and employee motivation, the State Council announced Friday.

In the past, the Chinese government has tended to take care of SOEs, regardless of whether they make or lose money. Employees at all levels are allowed to “eat from the same big pot,” the apathetic receiving the same wages as the assiduous.

In China, frontline workers at SOEs earn less than half as much as managers, according to a commentary published Monday by Jiemian.com, an online news outlet. “It is foreseeable that this kind of wage disparity will fundamentally change in the future,” the author wrote. “In other words, the wages for frontline workers at state-owned enterprises can be expected to rise.”

After graduating from one of the top universities in Shanghai, 30-year-old Yang Duoyi chose to work as an administrative staff member at an SOE near her home. She left her job after three years. “I felt like I worked a lot harder than most of my co-workers, but our salaries were the same, and I couldn’t see any potential for a promotion in my future,” she told Sixth Tone. With her motivation gradually diminishing, Yang said, she decided to take another job at a private company where she would be rewarded based on her performance.

According to the State Council, the performance of SOEs will be evaluated using industry-specific metrics. For fully competitive industries, a company’s performance will be based on its competitiveness within its respective market; for enterprises that mainly provide public goods, performance will be evaluated by considering cost control, product quality, and operational efficiency.

“The new reform will primarily impact SOEs that haven’t increased employee salaries in years,” a human resources manager at Shanghai Electric, a state-owned power company, told Sixth Tone. He added that he did not expect the reforms to impact Shanghai Electric, which already adjusts employees’ salaries based on their performance and the company’s annual profits. “An outstanding employee could get a raise of 10 to 20 percent,” he said. The manager would not give his name due to the current sensitivity of the matter.

Shao Yan has been working at a state-owned property management company in Shanghai since 2002. She told Sixth Tone she chose an SOE because of the easy work and wide range of benefits. When she started with her company, her “gray income” from subsidized groceries, subsidized public transport, and various other perks amounted to more than her actual salary. “We all know that most state-owned enterprises don’t adjust employees’ salaries the way multinational companies do,” Shao said. “That’s why we really rely on the benefits.”

Now 35, Shao says she was happy with her net income until 2012, when President Xi Jinping announced his hallmark policy: a sweeping anticorruption campaign that reduced or eliminated the prized benefits enjoyed by Shao and countless others. With these gone, her salary is just 60 percent of the city’s average. “It really put me in an awkward position, as I was used to the relaxed work environment at my SOE, and it would be difficult for me in a more competitive workplace, especially since I have a child at home to take care of,” Shao explained.

As to whether the new policy will be beneficial to her, Shao is skeptical. “I’m worried that state-owned employers will now have a reason to reduce our basic salaries,” she said.

Editor: David Paulk.

(Header image: A worker looks through a window at a power plant in Huai’an, Jiangsu province, May 8, 2007. VCG)